Understandability and Transparency of the Financial Statements of ...

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considerable. This is reflected by their attendance at every SORP Committee meeting, and as well, the SORP must be approved by the ASB before it can be published (Hyndman & McMahon, 2010). This ensures that the SORP and the ASB‟s interpretation are compatible, further enhancing the charities sector‟s conceptual framework in England and Wales. Next the international conceptual frameworks and their applicability to the charities sector are considered. 2.4.3 International There are two established international conceptual frameworks, one for the first sector (profit) and one for the second sector (public), which will be looked at next before investigating the gap in conceptual frameworks for the third sector which includes charities. 2.4.3.1 First sector – Profit making organisations The International Accounting Standards Board (IASB) is the standard setting body of the International Accounting Standards Committee Foundation (Simpkins, 2006b). The IASB‟s principal objectives are to “develop a single set of high quality, understandable, enforceable and globally accepted international Financial Reporting Standards (IFRSs)” (International Accounting Standards Board, n.d., p. 1). The relevance of this sector to the Australia and New Zealand conceptual frameworks is that the standards developed by the IASB are currently utilised in Australia and New Zealand for their sector neutral conceptual frameworks. 2.4.3.2 Second sector - Public sector organisations The International conceptual framework for the public sector (International Public Sector Accounting Standards Board, n.d.) is determined by the International Public Sector Accounting Standards Board (IPSASB) within the International Federation of Accountants (IFAC). IPSASB develop International Public Sector Accounting Standards (IPSAS) based on the IFRSs produced by the IASB, thus ensuring the convergence of both international frameworks. When developing new standards the IPSASB first looks at whether there is an appropriate IFRS and then determines whether identified public sector issues warrant departures from the IASB document (International Public Sector Accounting Standards Board, 2008b). It also modifies them to ensure that the standards can be more easily applied in the public sector, for example, through the use of sector specific examples (Controller and Auditor-General, 2009). In 24
certain cases there will be concepts in the public sector which have no equivalency in the for-profit sector, such as revenue from non-exchange transactions e.g. donations. If this is the case a separate standard will be developed (International Public Sector Accounting Standards Board, 2006). Schollum (2008) considers that more countries are likely to adopt IPSASs for use by their public sector entities which will increase the usability of these standards. As Perry (2009, p. 26), the chair of New Zealand‟s FRSB, states the “IPSASB is at a stage where the standards being produced are of a sufficiently high level that they could be adopted in New Zealand”. The New Zealand Controller and Auditor-General expressed concern regarding the use of IFRSs for public benefit entities and considered that adopting IPSASs would improve the overall quality of financial reporting standards for public benefits (Controller and Auditor-General, 2009). 2.4.3.3 Third sector - Charities A big gap in the international sector is the absence of any conceptual framework for charities or private NFPs. However, this has been acknowledged and members of the accounting standard-setting bodies in Australia, Canada, England and Wales and New Zealand have published a report (Australian Accounting Standards Board, Canadian Accounting Standards Board, Financial Reporting Standards Board, & Accounting Standards Board, 2008) that highlights the key NFP issues in the IFRS conceptual framework. In particular, there has been discussion on the decision-usefulness objective of financial reporting that needs to be broadened for charities and other NFPs to acknowledge the emphasis on accountability objectives (Australian Accounting Standards Board et al., 2008). Next, the regulatory and conceptual framework existing and proposed in New Zealand will be considered. 2.4.4 New Zealand Whilst ahead of Australia in terms of specific regulation of the charities sector, compared to England and Wales New Zealand‟s regulatory framework for charities is in its infancy, with the first charities specific legislation enacted only in 2005. As with Australia, New Zealand has had a series of working parties including: Property Law and Equity Reform Committee in 1979 (Newberry, 1994) The Working Party on Charities and Sporting Bodies (1989) which stated there should be a Commission for Voluntary and Welfare Agencies and Sporting Organisations; 25
Page 1 and 2: Understandability and Transparency
Page 3 and 4: CHAPTER 2: REGULATORY & CONCEPTUAL
Page 5 and 6: 4.3.3 Axiom 3 - The possibility of
Page 7 and 8: 6.6 Summary .......................
Page 9 and 10: Appendix One - Statement of Financi
Page 11 and 12: Abbreviations AASB Australian Accou
Page 13 and 14: Related Research Outputs The follow
Page 15 and 16: Acknowledgements My journey through
Page 17 and 18: Abstract Access to charities‟ fin
Page 19 and 20: CHAPTER 1: INTRODUCTION 1.1 Introdu
Page 21 and 22: More importantly the study will loo
Page 23 and 24: Unerman and O‟Dwyer (2008, p. 801
Page 25 and 26: adopted here is clarified, as the l
Page 27 and 28: March 1999. Further, a study by the
Page 29 and 30: those by: Vatter (1947); Anthony (1
Page 31 and 32: CHAPTER 2: REGULATORY & CONCEPTUAL
Page 33 and 34: (k) The erection, laying out, maint
Page 35 and 36: Before looking at the legal structu
Page 37 and 38: 2.3.4 Problems As with charity nome
Page 39 and 40: yet to be determined. This ensures
Page 41: per annum (Charities Commission, 20
Page 45 and 46: The focus of the Charities Commissi
Page 47 and 48: Unlike incorporated societies, the
Page 49 and 50: 2.4.4.4 Future conceptual framework
Page 51 and 52: problems with New Zealand‟s regul
Page 53 and 54: This research seeks to identify if
Page 55 and 56: charities” (Charity Commission, 2
Page 57 and 58: statements in different documents t
Page 59 and 60: seek to identify whether a lack of
Page 61 and 62: In the international arena transpar
Page 63 and 64: elevance is compromised. The link b
Page 65 and 66: 3.2 Complexities in Charities’ Fi
Page 67 and 68: 3.2.1 Accounting basis The „Accou
Page 69 and 70: application of the appropriate GAAP
Page 71 and 72: length transaction”. This definit
Page 73 and 74: There are four arguments against de
Page 75 and 76: Financial Accounting Standards Boar
Page 77 and 78: al., 2008; Newberry, 1992; Rees & D
Page 79 and 80: However, the notion of control is a
Page 81 and 82: Kilcullen et al., 2007b). Charities
Page 83 and 84: the amount of money spent on admini
Page 85 and 86: This research seeks to identify wha
Page 87 and 88: As a result of the literature revie
Page 89 and 90: the elements of the world, or rathe
Page 91 and 92: come about through the mutually sim
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Research reports from other organis
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clearer picture of the interviewee
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In England, Palmer and Randall (200
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APPROACHING PARTICIPANTS Within the
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availability of charities‟ financ
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As credibility was usually achieved
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clarifications. This approach was u
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to understand the meaning behind an
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analysis is both complete and impar
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subjective realities (Chua, 1986).
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To assure the study was dependable
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CHAPTER 5: ACCOUNTABILITY 5.1 Intro
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emphasis on the definition of accou
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supposition was that a lack of resp
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general public (Charity Commission,
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assumes the other is monitoring the
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performance reporting rather than f
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appropriate performance information
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examiners and the Charities‟ Boar
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which was set up in 2003. Charity a
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Western Australia, all financial st
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The fourth level of independent exa
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What are the major areas of concern
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subset of good accountability pract
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Programme refers to a meeting of ob
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ecording property, plant and equipm
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Figure 6-2 Dimensions of Financial
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Because the [charity‟s] finances
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„selling a story‟ makes them fo
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that you can use it [the stove] for
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the organisation pay to have those
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contributors twice - first to fund
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There is a need to record restricte
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charity will have control of a seco
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of accountants involved in Charitie
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their decision making. One auditor
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Whilst the sample in this thesis is
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Another problem my study found was
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framework funders would not be able
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The lack of professionalism must be
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New Zealand‟s charitable purpose
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We have since February of last year
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analysis was done of the first comp
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Also the idea of members „taking
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The transparency of their organisat
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7.3 Monitoring As discussed in Chap
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Zealand] Statistics Department poin
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There was a sub-committee running [
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useful for smaller organisation and
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change and they‟re doing a good j
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problem that you‟ve [pause] we‟
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legislation and monitoring. Of part
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CHAPTER 8: PERFORMANCE ACCOUNTABILI
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In New Zealand both the Controller
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what proportion of their charitable
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None of the above reasons includes
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Charities Commission publication
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achieve an appropriate level of per
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more effectively in order to increa
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eneficiaries‟ needs are met is an
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As well as setting aside reserves,
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The important aspect of the propose
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Mostly they [the funders] are worki
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eyond financial health to include
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8.4.4 Prescribed performance report
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impact they have on their beneficia
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statements, but also other mechanis
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compare different charitable organi
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shock when their accounts are eithe
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9.4 Academic Contribution This rese
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Outcomes (Effectiveness) Figure 9-1
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Charities Register, of which thirty
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success in their activities. For as
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Ahrens, T., & Chapman, C. S. (2006)
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Australian Accounting Standards Boa
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Bradbury, M. E., & Baskerville, R.
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Charities Commission. (2009f). A sn
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commission.gov.uk/Our_regulatory_ac
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Cordery, C. J., & Baskerville, R. (
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Eisenberg, P. (Ed.). (2005). Challe
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Fremont-Smith, M. R. (2004). Pillag
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Hui, D. (2006). Financial Reporting
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http://www.ifac.org/Members/DownLoa
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Maxwell, J. A. (1992). Understandin
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http://www.nzica.com/AM/Template.cf
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O'Sullivan, N., & O'Dwyer, B. (2009
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Robson, C. (1993). Real World Resea
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Television New Zealand (Writer) (27
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Appendix One - Statement of Financi
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Appendix Three - Semi-structured in
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Appendix Five - Participant informa
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Appendix Six - Transcriber’s Conf
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Heading 1 Heading 2 Heading 3 Prope
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